Equity markets are mixed this morning as Asia posted modest gains. There certainly isn’t the same buying momentum that we experienced yesterday, and traders are searching for another reason to buy. It seems like we are at a crossroads; if a break to the upside isn’t made soon, we could be in for a slow decent.
The closure of the Chinese market for Golden Week is both a help and a hindrance; the speculation of a stimulus package by Beijing hasn’t been confirmed or denied, and when the country is back to business on Thursday it will be a crucial moment for global markets.
The mining stocks have lost the most ground today, and the speed at which traders are cashing in their long positions after a massive rally sums up how dealers feel about natural resource stocks at the moment.
Dealers are still cautious when it comes to commodity companies because the fact remains that China is cooling off and demand for minerals is dwindling, but at the same time the whispers of an easing scheme from Beijing is keeping the bargain hunters in the loop.
We are expecting the Dow Jones to open 20 points lower, at 16,750. The US market is catching its breath for the moment, but it is well positioned ahead of the New York open as a marginal decline in the futures market is nothing to be alarmed over. US dealers can always fall back on the comfort the Fed are becoming less likely to hike interest rates this year, which will keep the bulls happy.